Loan or advance classification under deemed dividend law confined to the B.R. Laboratories transaction

Concurrent findings that disputed payments were current adjustment entries or inter-corporate deposits, and not loans or advances, meant section 2(22)(e) was not attracted on those facts. The Revenue's appeal was therefore confined to the re-framed substantial question of law concerning the transaction with B.R. Laboratories Private Limited, and the other proposed question was held not to survive. The order thus narrows the controversy to one live issue for future adjudication.

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Issues: Whether the appeal should be entertained only on the re-framed substantial question concerning the transaction with B.R. Laboratories Private Limited, and whether the other proposed question ceased to survive.

Analysis: The Court noted that the Revenue pressed the appeal only in relation to the transaction with B.R. Laboratories Private Limited. It accepted the distinction drawn from the earlier connected matter, where concurrent findings had already been recorded that transactions in the nature of current adjustment entries or inter-corporate deposits were not loans or advances attracting section 2(22)(e) of the Income-tax Act, 1961. On that basis, the Court reframed the first question of law to confine it to the B.R. Laboratories transaction and held that the second proposed question would not survive.

Conclusion: The appeal was admitted on the re-framed question of law confined to B.R. Laboratories Private Limited, and the other proposed question was treated as not surviving.

Final Conclusion: The order is an admission order that narrows the controversy to one substantial question of law and leaves the merits for future adjudication.

Ratio Decidendi: Where concurrent factual findings show that disputed payments are adjustment entries or inter-corporate deposits rather than loans or advances, section 2(22)(e) is not attracted on those facts, and the appeal may be confined only to the remaining live issue.

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